Digital assets have been the name of the game for IP lawyers in 2022, from the Metaverse to NFTs and more use of blockchain technologies. Excel V. Dyquiangco examines what lawyers see in their future, in his look at the coming IP trends for 2023.  

While the year 2021 signified economic recovery from the pandemic, the year 2022 undoubtedly marked a sudden shift to digital assets. The rapid development of the Metaverse, non-fungible tokens (NFTs), and blockchain technologies have all impacted IP rights in 2022. There have also been a surge of Web3 trademark filings, such as the case in China where many foreign and local companies filed applications for marks for use in virtual environments and in relation to NFTs.  

In 2022, another notable development in relation to trademark filings can be observed in how trademark offices around the world were providing more guidance for the classification of marks relating to the Metaverse, NFTs and other virtual goods. The European Union Intellectual Property Office (EUIPO), for example, clarified in their 2023 draft Guidelines that virtual goods would be classified under Class 9 as they are considered digital content, but that “virtual goods” items must be sufficiently clear and precise so as to specify exactly what the virtual goods concern. Further, the EUIPO emphasized that they would not accept non-fungible token items on their own, and such items must specify the exact digital content that the NFT is used to authenticate. 

In addition to the Metaverse and virtual assets, the Covid-19 pandemic had a hand in shaping IP in the past year. Some countries saw a wave of patent filings related to products to combat the pandemic. 

Technology and AI 

With more and more technologies being developed, some law firms are already using AI to help analyze documents and evidence. Legaltech, for instance, is already providing legal services and supporting the legal industry. According to Rosita Li, a partner at Ellalan in Hong Kong, legaltech could continue to be implemented and be a value-added element to law firms’ efficiency, cutting down time in more repetitive, predictable tasks, and allowing lawyers to focus their time and efforts towards areas requiring more specialized analysis and experience-based judgment. 

She says: “While the involvement of AI and other machine learning technologies in document analysis and data interpretation could boost efficiency of the legal practice, the ability of such technologies to develop individually could raise questions of accountability, accuracy and responsibility, among others. Although AI can help be more time- and cost-efficient, law is fundamentally a people’s business and it is the lawyers who can add value by handling matters with a more personal touch.” 

Arjel De Guzman, a founding director at Optmarks in Manila, couldn’t agree more. “It is quite inevitable that the full potential of technology would be fully unfolded and further utilized in the near future,” he says. “Certainly, the legal profession would likewise benefit from these innovations, including AI. The legal practice could benefit from an AI-based plug-and-play type of system to augment its workforce and provide ready-made solutions for traditional works done by individuals. However, legal practice, being essentially a human-centric profession in its nature could have some aspects of it which may be limiting AI. Simply, lawyers and paralegals may not be fully replaced by AI. While AI can complement what lawyers and paralegals do, especially with back-end operations, AI cannot replace them because the legal practice thrives on human perception and creativity which, I think, is irreplaceable.” 

He adds: “Innovation is always geared to make things simple, efficient and affordable. These basic precepts would expectedly be more present and tangible effects of these trends in technology. We already saw unsurpassed levels of technology and innovative adoption in the recent years particularly with AI and blockchain technology. In the near future, I think they will all the more affect human activities and would create an imperative to consider massive digital adoption in various aspects of business and trade.” 

Software applications such as SmartLaw and AskAILA have been assisting legal firms in Southeast Asia in legal research, reviewing of contracts and offering legal advice. Jyeshta Mahendran, a partner at Shearn Delamore & Co. in Kuala Lumpur, says: “These AI-powered software applications will reduce the time taken for time-consuming tasks and save costs for the client by dissecting through thousands of documents and answering law-related questions in seconds.” 

She adds: “Although there may be a growing global awareness of such useful platforms, there may still be less take up in utilizing these services with such technologies still being in their infancy stage and less familiarity in substituting manpower within the organization. The risk of being liable for professional negligence may also be a hindrance despite the high rate of accuracy of AI software.” 

Luxury in the metaverse 

With the metaverse being a huge buzzword and making waves in the region, Mahendran says that lawyers at her firm expect to see an exponential growth moving forward. “Virtual reality is the next big frontier in Asia, and we have seen rising trends in these areas,” she says. Some examples: 

Luxury goods in the metaverse: 

• Tmall (a Chinese ecommerce platform) has created its first “Double 11 Metaverse Art Exhibition” to introduce a virtual shopping experience which exhibits some luxury brands such as Burberry or Coach and provide users with eight limited NFTs. 

Entertainment in the metaverse: 

• Zepeto, a Web3 metaverse platform based on Solana blockchain, has also been a rising platform in Asia for debuting virtual idols and creating a virtual fan signing event. 

Virtual Influencers: 

• There has also been an increasing trend in virtual influencers, whereby computer-generated stars own Instagram accounts and are able to interact with humans via online posts and music. 

Jessica Lim, a legal associate at Shearn Delamore & Co. in Kuala Lumpur, says that there is also an upcoming trend in AI-implementation in the workplace in this region amongst others in this area:  

• An increasing need for warehouse automation management 

• Use of AI robots to move, sort, and lift items in the warehouse which ensures more are done in less time. 

• Conversational AI or Voicebot AI will be widely used for customer supports to allow businesses to solve customer problems at a smoother and quicker pace. 

“There has been an increasing trend of diversifying investment stakes,” she says. “Apart from traditional investments such as shares and properties, consumers have been turning their focus on non-fungible tokens (NFTs). Any digital work which can be represented in digital form such as a photo, video, or scan can be turned into an NFT. There have been NFT issues from a copyright perspective as majority of NFT works are artistic works that are protected by copyright.” 

Mudit Kaushik, partner at Verum Legal in New Delhi, adds that in the coming years, AI will also be able to meet the needs of legal experts when it comes to finding documents. “The sheer volume of paperwork that lawyers and judges must review every day makes it impossible to keep track of their individual titles,” he says. “Computers are learning to recognize documents from a brief description provided by a human. And lawyers and judges will appreciate the relief from having to do so much administrative work.” 

He says: “However, there are potential issues with using AI in legal technology. The advancement of AI is predicated on a small number of training data sets. This can cause the development of legal reasoning to stall. Without any type of oversight, the AI will inevitably fall back on previously established patterns of thinking or action, with no advancement in the underlying legal principles. The use of AI for contract management makes it more difficult to accommodate contract variants because the AI will only use the contracts included in its input data. Therefore, despite the benefits, there are also dangers associated with using AI in the law.” 

Being hands-on 

That said, while technology has made things easier and more efficient, Marcus Woodhouse, a director and principal at Woodhouse IP in Auckland, says that some law firms just might go back to basics. Case in point: his firm doesn’t have any current plans to incorporate AI into its systems at this stage.  

“We prefer the personal touch in terms of the ability of a lawyer to analyze and process documents and then work directly with our clients,” he says. “In our way of thinking, there is no substitute at this stage for having full hands-on lawyer input at every stage in every case. This is not to say that we won’t look at AI as an option in some cases when the technology improves significantly. But at this stage our experience indicates that AI has not reached the stage where it can match a skilled human mind.” 

Woodhouse adds that automated systems appear to “dumb down” the ability of lawyers to offer tailored solutions to their clients’ needs.  

“It appears to be an extension of a more cookie cutter approach allowing firms to reduce the hours spent by lawyers which in turn increases profits due to reduced lawyer input,” he says. “But in our view, it is the end result for our clients that is most important, and we have proven again and again that good results require strong lawyer input.” 

He adds: “Local IP offices are increasingly trying to encourage self-filing by applicants. However, in our experience, this does not help New Zealanders and Australians because many do not understand what they are doing when filing their own IP applications and the results can often be disastrous for their businesses. We often find ourselves operating as the ambulance at the bottom of the cliff. We’ve even seen situations where a large local IP Registry has deliberately not provided all the information required for self-filers to make informed decisions. The reason they gave us for not providing all the necessary information was that it would ‘complicate’ the information provided to self-filers. And we’ve also seen situations where our clients have been given clearly incomplete and incorrect advice from a local IP Registry Office, and it’s had a major impact on their business. If a lawyer had been involved from the beginning it would have produced a much better result for the client.” 

“We can certainly see a continuation of the trend toward using Zoom and Microsoft Teams for meetings,” he says. “For us, this works very well as its still highly personal and there is still always an option to meet a couple of times a year in person.” 

David Haskel, a partner at Abacus IP in Phnom Penh, says that, in his view, AI has the potential to up-end the IP industry, and legal services more broadly.  

“That is a long-term, gradual development, as AI improves and is adopted by firms (and clients). In the short term, there is quite a bit of marketing hype surrounding what’s available. Poorly implemented, machine learning produces misleading and worse than worthless results. For instance, in the trademark clearance search tools I have seen using AI, the results are just not usable. AI still has a way to go there,” he says.  

The role of IP rights 

With the Asia-Pacific region leading the world in technology advancements for many years, the development and ownership of new technology necessitate legal safeguards for the benefit of its creators. This results in IP rights continuing to be crucial to the development of technology in the Asia-Pacific region. 

Kaushik adds that according to World Intellectual Property Organization (WIPO) data, Asian patent offices received about 70 percent of all patent applications worldwide last year. China attempted to include advances in 26 sectors connected to intellectual property rights in its most recent Five-Year Plan. 

“The Asia Pacific Economic Cooperation (APEC) group, known as the Intellectual Property Rights Expert Group or IPEG, is in charge of implementing the TRIPS Agreement, or the Agreement on Trade Related Aspects of Intellectual Property Rights, of the World Trade Organization,” he says. “The group publishes regular reports on the evolution of intellectual property rights in the Asia-Pacific region. In one of its most recent papers, the team highlighted how Asian businesses had a large number of standard essential patents (SEPs) for cutting-edge technologies such as 5G, driverless vehicles and monitoring gadgets. Such SEPs enable a corporation to hold a patent on some critical technology utilized in a number of developments, allowing such companies to dictate how the technology is developed. Asian corporations have SEPs connected to the Internet of Things, which is essentially the future of technology, which will go a long way toward consolidating the Asia-Pacific region as a leader in the world’s intellectual property system.” 

The Madrid System and other filings 

De Guzman adds that intellectual property trends in the Asia-Pacific region, as always, would be something to watch out for. “China for one, is a constant top filer for IP globally and the next year would somehow expectedly see the same trend,” he says. “It is intriguing to note and observe though how regulations would revolve and change around the increasing concerns and complaints on bad faith filings especially for trademarks which allegedly originate from China.” 

In the Philippines, certain developments are being anticipated like the upcoming system for registration of geographical indications. “The Philippines will soon be welcoming its own register of protected geographical indications, which is a welcome development, especially to provide a competitive advantage of various local and indigenous products,” he says. “It is also an affirmation of the Philippines’ commitment to its obligation as a member of the World Trade Organization to accord reciprocal rights and protection to geographical indications of other member states.” 

He adds: “The amendment in the Philippines’ trademark rules are also in the works. The proposed rules would now allow for the registration of color marks, position marks, three-dimensional marks, hologram marks and motion marks.” 

In Hong Kong, in addition to brands jumping on the bandwagon of registering trademarks for use in the virtual world and on NFTs, Li says that another development to be anticipated would notably be the implementation of the Madrid System, i.e., the international registration (IR) system for trademarks. 

“While the IR does not currently apply to Hong Kong, the government is working towards its implementation in Hong Kong, to enable foreign companies to designate their IRs into Hong Kong,” she says. “Notably, however, Hong Kong’s status as a Special Administrative Region of the People’s Republic of China (PRC) means that a Hong Kong IR applicant would be precluded from designating the PRC for their IRs, and vice versa.” 

A bright future 

Kaushik adds that in terms of intellectual property rights, the future seems bright. “There is a growing awareness among governments around the world of the importance of establishing uniform intellectual property laws that will encourage innovation and the development of new technology,” he says. “When AI is ubiquitous, intellectual property rights become paramount. Without the assurance of legal protection for their intellectual property, innovators would be dissuaded from developing groundbreaking new products.” 

With the establishment of the Unified Patents Court, the European Union has begun implementing reforms to modernize patent examination and issuance.  

“With this, a sizable portion of the world is moving toward a system that better protects intellectual property. In the United States, the International Trade Commission is expected to assume responsibility for IP matters, including both the issuance and enforcement of IP protections,” he says. “This would also establish a reliable system for verifying and protecting intellectual property. When it comes to the Asia-Pacific region, India has emerged as one of the leading players, and its government officials have become more passionate about protecting intellectual property. This demonstrates a global shift in legislation in favour of stronger IP protection mechanisms. If this trend maintains, a universally applicable IP protection system will sweep the globe alongside the arrival of AI.”